Forecast: The Customer Experience Will Get More … Experienced

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CEM will be an increasingly critical part of CRM by the middle of 2005 and perhaps will dwarf many other facets of CRM within a very few years.
—Paul Greenberg, 2005 Forecast

I was right and I was wrong. I was right. Customer Experience Management is now a critical part of CRM. And I was wrong. It didn’t take a few years. CRM is evolving—morphing really—into something that it wasn’t just a few years ago: a strategy built around the interactions and relationship that the customer has with you. This will continue at high speed in 2006.

What is the evidence? Even the mainstream media are beginning to pick up the fact that the customer of 2005 and beyond is fundamentally different than the customer of a decade—or even fewer years—ago. Just look at one of BusinessWeek’s awards for the best ideas of 2005 (Dec. 19, 2005):

Now the game is to create wonderful and emotional experiences for consumers around whatever is being sold. It’s the experience that counts, not the product…It’s fast becoming the norm in all industries.

If the mainstream media is this cognizant of the customer experience that lies at the core of new customer strategies—for smart companies, that is—then sumpin’ is happ’nin.

The evidence of the growth in customer experience already exists in a number of ways …

  1. The profitability and substantial revenue streams being produced by the prototypical new business models. The PC/video games marketplace is based on providing a customized "experience" for the game—done through embracing hacking of the game systems, themselves—and vast user communities associated with that. According to reports done by Pricewaterhouse Coopers, that marketplace is projected to around $26 billion this year and close to $54 billion by 2009.
  2. The intense desire by customers to not just have personalized relationships with the producers but to jointly create value with those producers—all as part of their experience. For example, Proctor & Gamble uses InnoCentive, a network of 80,000 scientists, to help solve problems that its staff can’t. BMW put out an "Innovation Toolkit" on the web for drivers to help design new features for the company’s newest lines of cars. The toolkit was downloaded by 1,000 people. In 2007 models, there will be 13 features related to the OnStar-like telematics functions that will be part of those models.
  3. The restlessness of the new generations of customers and the way that they shatter conventional marketing wisdom. Traditional marketing wisdom says that "brand selection ends at 40" (presumably along with life—at least for marketers). That is being thrown on its head. Studies being done by Yankelovich and other marketing research firms are finding that those over-40 generations— all baby boomers and the oldest Gen Xers—are perfectly willing to move to new brands. In one 2004 study, about 63 percent of the customers queried said they would have no problem whatever moving to another consumer electronics brand.
  4. The need to have a "My Experience" experience. This can be seen in the growth of "democratic self-expression" with more than 20 million blogs, tens of thousands of podcasts and more than100,000 people willing to establish an avatar-based, personally sculpted alternate "life" on the Second Life web site with homes, identities, social groupings, jobs and more that will generate more than $2 million in real revenue per month for virtual businesses run by the residents. The desire for control over your own experience is one that businesses are just learning to work with now.

In other words, we are already in the midst of what Joe Pine II and James Gilmore called "Experience Economy," (The Experience Economy: Work Is Theatre & Every Business a Stage, 1999 Joseph Pine II and James H. Gilmore), and if you aren’t ready for it, get ready. 2006 is the year it becomes a dominant trend that can’t be ignored. I’ll stake my personal experience on it.

Paul Greenberg
The 56 Group, LLC
Paul Greenberg, the president of the 56 Group, LLC, is the author of the best-selling CRM at the Speed of Light: Essential Customer Strategies for the 21st Century, 3rd edition. Greenberg is co-chairman of Rutgers University's CRM Research Center and executive vice president of the CRM Association. His blog PGreenblog won both of the only two awards ever given to CRM blogs.

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